British manufacturers continue to face subdued demand and persistent price pressures, according to the latest CBI industrial trends survey. The monthly order book balance stood at -28 in February, marginally higher than January's -30 but still well below the long-run average of -14.
The survey, which asks firms to assess whether conditions have improved or deteriorated, also indicated that output fell over the three months to February, with a balance of -14. While this was an improvement on January's -25, manufacturers expect output to decline at a similar pace over the next three months. Most firms also anticipate raising their prices, with the expected prices balance at +26, down from January's +29, which was the highest reading since February 2023.
Cameron Martin, a senior economist at the CBI, said many firms were reporting that customers were holding back amid low confidence and elevated cost pressures. The survey adds to a mixed picture for the UK economy, with households feeling dismal about their finances and companies cutting staff, although some other business surveys have pointed to rising optimism since the start of the year.
Manufacturing accounts for around 9% of the economy, and the Labour government has made removing barriers to the sector's expansion a key priority. In June last year, it unveiled a new industrial strategy that includes £2bn in investment over four years to lower energy prices for thousands of manufacturers. However, the scheme is not due to begin until 2027, and the CBI has urged the government to bring it forward, arguing that tackling punitive energy costs would strengthen competitiveness and boost demand.
Separately, the Federation of Small Businesses (FSB) warned that many of its members were facing unparalleled cost pressures that could lead to a collapse in small business viability. Tina McKenzie, the FSB's policy chair, has written to Chancellor Rachel Reeves asking for measures to help stem the tide of rising bills due in April.
